Croy Inc. has the following projected sales for the next tive months: MonthSales
ID: 2564390 • Letter: C
Question
Croy Inc. has the following projected sales for the next tive months: MonthSales in Units April May June July August 3,520 3,815 4,630 4,125 3,940 Croy's finished goods inventory policy is to have 60 percent of the next month's sales on hand at the end of each month. Direct material costs $2.60 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month's production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,697 pounds. Required: 1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.) April May June Budgeted Production (Units) 2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to 2 decimal places.) April May June Budgeted Cost of Material PurchasedExplanation / Answer
Answer
Production = Budgeted Sales units + required closing inventory – Opening inventory
April
May
June
July
August
A
Sales in Units
3520
3815
4630
4125
3940
B=Next month's 'A' x 60%
Ending inventory required
2289
2778
2475
2364
0
C=A+B
Total requirement
5809
6593
7105
6489
3940
D=B of last month
Opening Stock
0
2289
2778
2475
2364
E=C-D
Budgeted Productions (Units)
5809
4304
4327
4014
1576
Working
April
May
June
July
A
Budgeted Productions (Units)
5809
4304
4327
4014
B
Raw Material required per unit
2
2
2
2
C=AxB
Total Raw material required
11618
8608
8654
8028
D=50% of next month's 'C'
Ending inventory
4304
4327
4014
0
E=C+D
Total requirement
15922
12935
12668
8028
F='D' of last month
Opening Inventory
3697
4304
4327
4014
G=E-F
Raw material (pounds) to be purchased
12225
8631
8341
4014
H
Raw material cost per pound
2.6
2.6
2.6
2.6
I=G x H
Budgeted Cost of material purchased
31785
22440.6
21686.6
10436.4
April
May
June
July
August
A
Sales in Units
3520
3815
4630
4125
3940
B=Next month's 'A' x 60%
Ending inventory required
2289
2778
2475
2364
0
C=A+B
Total requirement
5809
6593
7105
6489
3940
D=B of last month
Opening Stock
0
2289
2778
2475
2364
E=C-D
Budgeted Productions (Units)
5809
4304
4327
4014
1576
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